The Evolution of “Privacy-Tech”: Current State
This is the fourth of a four-part series on “Privacy-tech”. You can read the introductory section here.
Current state of these technologies
The companies who have the most to gain and lose from the increased demands on privacy are the big-tech companies such as Google who benefit from it, and cloud-computing providers who provide them as a service. Consequently, there has been a lot of development from these players in creating open-source technologies across the spectrum of privacy-preserving technologies. In the years to come, more startups can be expected in:
- Creating targeted solutions for specific industries, such as how data vault and clean-room technologies are building for PII, healthcare and finance applications
- Players who bring academic research into commercial prototypes
Current investors in startups that are building these technologies include strategic investors such as Intel Capital, Snowflake and financial investors such as Insight Partners. The total investments in “privacy” related companies touched over $3.7bn in the past 2.5 years according to CB Insights — these span internet companies that develop or enable adoption of privacy–technologies.
Looking at investments and players by industry, we could expect:
- In the short-term, in 2–3 years, advances in post-quantum cryptography
- In the short to medium term, in 3–4 years, adoption picking up for use-cases for data clean-rooms and vaults
- In the long-term, in 6–7 years, decentralized platforms and data vaults gaining mainstream adoption
Enablers for large-scale adoption include:
- Increase in compliance requirements: If other states in the US replicate California’s CCPA, data vaults will need to become a new layer in the modern data stack
- Use-cases moving from compliance and regulation to value unlocked from data collaboration: For example, Skyflow allows e-commerce players to store and process card data on Skyflow’s data vault, unlocking payment gateway lock-ins
- Use-cases in Defi, marketing and healthcare could create a large market for adoption
- Improvements in algorithms and hardware acceleration through use of FPGAs and ASICs: Post-quantum cryptography, which is an adjacent field that is building cryptographic techniques immune to quantum computers will fuel development in hardware acceleration techniques. Zk-proving technologies are garnering a lot of interest to scale blockchain, with over $1.4 bn in venture investments till date according to Crunchbase
Conclusion
Privacy is increasing in priority for consumers, regulators and businesses. Advances by big tech, academia and startups continue to push the envelope of computation on private data through new technologies. In the coming years, we can expect:
- Increasing adoption of differential privacy to protect against data breaches
- Stricter regulations will continue to be the primary driver for adoption for Privacy-enhancing technologies in the short-term
- Brands, healthcare and financial institutions adopting data clean-rooms for data sharing and collaboration
- Advances in building privacy on-chain to support use-cases in DeFi, which will potentially see a boom after regulatory clarity around cryptocurrencies
- As use-cases in DeFi and Marketing deliver value in the medium-term, hardware acceleration technologies will see advances, creating a flywheel that will bring down costs and drive further adoption in the long term.
By 2030, data privacy will become an essential component of the modern data management stack, just as security is today.
